The foundries are getting ready to put the squeeze on the semiconductor industry, just as the semiconductor industry decides to depend more and more on the foundries.
"The foundries are cutting back on spending although they're running at 90 per cent utilization", Bill McLean, president of US analysts IC Insights, told the MEDEA+ conference in Budapest, yesterday.
"The foundries are fed up with seeing the price per wafer going down", added McLean, "so they are cutting back on spending, just as all these companies are going fab-lite, and off-loading their manufacturing to foundries. It's a major clash in the industry."
In general terms, the semiconductor industry is in great shape, according to McLean, who cited the sixth successive year of double digit unit growth as evidence of a flourishing industry. There's never before been six successive years of double digit unit growth in the industry's history.
One reason why the dollar growth is not as high as it was, is because there is no longer a single silicon cycle, instead there are many silicon cycles based on different products, according to McLean.
So, when one product is in shortage, another is in over-supply. "What would happen if all the products have the same cycle again?" asked McLean, "then the semiconductor industry would have another 20 per cent growth year."
Next year should be a good year because it is a US presidential year and that is usually a good growth year, according to McLean.
"There was only one year (1980) when there was a recession in an election year", said McLean, "and, that year, the semiconductor industry grew 20 per cent."
See also: The Mannerisms blog, with chip industry musings from David Manners